What business leaders think of the tariffs

As was already reported in the press, the ISM manufacturing index dipped in March. The overall index dropped below the 50 breakeven level and the orders index—a useful leading indicator fell sharply but remains above 50.

However, the big story in this report were not the numbers, but the quotes in the “WHAT RESPONDENTS ARE SAYING” section. This gives them an opportunity to anonymously express their concerns, without putting a target on their back. Here are all of the quotes from the report:

• “Complex markets saw a surge in volume buying in anticipation of 2025 being slightly better than 2024. In March, however, all markets saw a slowdown, with fear and inventory stocking to hold through a potential crisis.” [Chemical Products]
• “Acute shortages continue to impact supply chain continuity. Chinese restrictions on critical minerals such as germanium have caused major shortages, resulting in all supply needed in 2025 already assumed — and, not surprisingly, significant price increases as a result. Tariffs are causing minor ripples at the moment in securing supply, with purchase order terms narrowing due to uncertainties. A&D (aerospace and defense), which has been very resilient, is starting to see questionable medium- to long-term demand due to governmental policy, including retaliatory actions taken by foreign countries with foreign military sales.” [Transportation Equipment]
• “Customers are pulling in orders due to anxiety about continued tariffs and pricing pressures.” [Computer & Electronic Products]
• “Starting to see slower-than-normal sales in Canada, and concerns of Canadians boycotting U.S. products could become a reality.” [Food, Beverage & Tobacco Products]
• “Business condition is deteriorating at a fast pace. Tariffs and economic uncertainty are making the current business environment challenging.” [Machinery]
• “New order levels have increased and are better than expected. We suspect that our customers are trying to build inventory at current prices to get ahead of expected tariff and related cost increases. We expect this surge in demand to be short-lived.” [Fabricated Metal Products]
• “Demand has been stable, consistent with last year. No evidence of growing demand. Tariff impacts and mitigation strategies are a daily conversation.” [Electrical Equipment, Appliances & Components]
• “Newly implemented tariffs are significantly impacting gross profits. Canada’s new tariffs on U.S. goods are significantly impacting orders from that country. Quotes and sales are lower from Europe due to the threat of retaliatory tariffs.” [Miscellaneous Manufacturing]
• “Worldwide economic instability has really begun to impact our oil and gas business. Aside from the change in the U.S. administration, the economies of China, India and Europe are drivers in what we believe is the next cyclical trough.” [Petroleum & Coal Products]
• “Bearish market sentiment and tariff applications and costs have dominated discussions over the past month and should continue to dominate markets until a clear path forward is determined. Overall concern is whether or not demand destruction will occur with higher pricing.” [Primary Metals]

Clearly these folks are very worried about the trade war. Three things are striking about their concerns. First, outside of a recession I can’t recall any time when the comments were this negative. Second, manufacturing is supposed to be the big beneficiary of the trade war. Third, most of these business executives are likely Republican. And yet, they are clearly very unhappy.